Use the Following to Answer Questions

question 206

Multiple Choice

Use the following to answer questions:
-(Figure: Monetary Policy and the AD-SRAS Model) Refer to Figure: Monetary Policy and the AD-SRAS Model.If the economy is at point h because of an open market purchase by the Bank of Canada and no further monetary policy is implemented,in the long run nominal wages will _____,SRAS will shift _____,real GDP will _____,and the price level will _____.

• A) increase;to SRAS';decrease;increase
• B) increase;to SRAS';increase;decrease
• C) decrease;farther to the right;decrease;increase
• D) decrease;to SRAS';increase;decrease

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Definitions:

Absorption Costing

Accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Unit Product Cost

The cost calculated per unit, combining all expenses including materials, labor, and overhead related to the production.

Variable Costing

A method of accounting that comprises solely of variable production expenses, such as direct materials, direct labor, and variable manufacturing overhead, in the calculation of product costs.

Variable Costing

An accounting method that includes only variable costs (costs that change with production levels) in product costs and treats fixed costs as period expenses.